Rounding Prohibited for California Non-Union Meal Breaks and Penalties

Rounding Prohibited for California Non-Union Meal Breaks and Penalties 

Federal and state law permit rounding of timecard entries to the nearest tenth or even nearest quarter hour to pay regular and overtime wages as long as the rounding methodology is neutral on its face and as applied in practice. On February 25, 2021, the California Supreme Court ruled in Donohue v. AMN Services, LLC that rounding is inapplicable to meal breaks and determination of penalties for late, missed or short meal periods. This decision could impact calculation of meal penalties for production companies with California non-union workforces.

Generally, California law requires an off-duty meal period of at least 30 minutes must be given before the end of the 5th hour of work (6 hours of work for motion picture industry). Any meal break not satisfying these requirements would trigger a meal penalty premium equaling one hour of regular pay, unless it was shown that the minimum required meal period was made available to the employee and the employee chose to skip it or take a late/short break (very difficult to prove). The court in Donohue reasoned that time rounding would defeat the particularized requirements when a meal break must start and how long the minimum meal break must last and so decided that, as applied to meal period compliance, rounding would be impermissible. And, determination of whether a compliant meal period was given to avoid a penalty would follow from the actual time data captured in the timecard instead of rounded time data in the payroll system.

The healthcare employer AMN in Donohue used computer timeclocks to record nursing worker time to the minute. Then, AMN’s payroll system rounded the timeclock punch data up or down to the nearest 10 minutes (e.g., 11:04 a.m. rounded down to 11 a.m. while 11:05 a.m. rounded up to 11:10 a.m.). Regarding meal breaks, meal start-end timeclock punches of 12:04 p.m. and 12:26 p.m. (22 minutes) rounded to 30 minutes (12 noon to 12:30 p.m.) in AMN’s payroll system and thus no meal penalty was paid in that scenario. AMN’s payroll system had a fallback drop-down menu feature that triggered for employees to complete when a meal break didn’t occur at all or - after rounding - started late or was below 30 minutes. If the employee did not choose an option indicating it was their choice to forego or take a late/short meal period, a meal penalty would trigger. In this case though, the drop-down never appeared because rounding created the appearance that the meal periods were timely and at least 30 minutes. As a result, the Supreme Court remanded the case to the trial court for collection of further evidence noting that raw time records reflecting late/short meal periods were presumptive evidence of violations triggering meal penalties that AMN would have to rebut through other evidence.

Special rules for the motion picture industry lengthen the deadline for start of the meal period to the end of the 6th hour of work for non-union groups and contain an exemption for unionized workers under a collective bargaining agreement (CBA) as long as the CBA contains a meal period requirement and a monetary premium for violations. The anti-rounding ruling in the Donohue case for meal penalty calculation serves as a motivator for production companies with California non-union workforces to consult with their own legal advisors to review and manage the stricter meal period environment responsibly to avoid inadvertent increase in meal penalties.

For any questions about this Alert, you may contact:

Scott Bishop, Vice President, Employment Law | sbishop@ep.com

Alan Wu, Director, Employment & Labor Relations Counsel | awu@ep.com

Joe Scudiero, Senior Vice President & Chief Labor Counsel | jscudiero@ep.com